SEC Connect





 











Exhibit 10.1



 



EXECUTIVE EMPLOYMENT AGREEMENT


 


This Executive Employment Agreement
(“Agreement”) is made and effective this date of
December 12, 2016, by and between TRACK GROUP, INC., a Delaware
corporation (the “Company” and, together with its
subsidiaries, the “Company Group”) and PETER K. POLI,
an individual resident of the State of Michigan
(“Employee”).


 


NOW,
THEREFORE, the parties hereto agree as follows:


 



1.            

Employment. Company hereby agrees to
employ Employee as its Chief Financial Officer, and Employee hereby
accepts such employment in accordance with the terms of this
Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity
between the terms of this Agreement and terms of employment
applicable to regular employees, the terms of this Agreement shall
be definitive. Employee’s duties shall be performed at the
Company’s offices in Illinois. The parties acknowledge that
Employee will be required to travel in connection with the
performance of his duties.






 



2.            

Duties of Employee. During the
Employment Term as defined in Paragraph 5, Employee will perform
his duties faithfully and to the best of his ability and will
devote his full business efforts and time during normal working
hours to the Company. Employee will report to the Chief Executive
Officer (“CEO”) and Board of Directors (the
“Board”) of the Company. Employee shall be responsible
for duties typical of the office held by the Employee as set out in
Article V. Section 28(f) of the Company’s Bylaws.
Furthermore, Employee shall perform such other duties and projects
as may be assigned by the CEO and the Board that are consistent
with his position. Notwithstanding the foregoing, Employee shall be
permitted to (i) be involved in not-for-profit or charitable
activities, and (ii) with the advance consent of the CEO or Board
(which consent shall not be unreasonably delayed or withheld),
serve on the board of directors (or similar boards or committees)
of no more than two other organizations that do not compete with
the business of the Company Group provided that such activities do
not materially interfere with Employee’s responsibilities
hereunder.






 



3.            

Compensation. Employee shall be paid
compensation during the Employment Term (as defined in Section 5)
as follows:






 



A.            

A base salary of
$240,000.00 per calendar year, payable in installments according to
the Company’s regular payroll schedule. No less frequently
than annually, the Compensation Committee of the Board (the
“Compensation Committee”) shall review Employee’s
base salary and consider in good faith customary increases, in
accordance with the charter of the Compensation
Committee.






 



B.            

Employee will be
granted an incentive stock option to purchase One Hundred Thousand
(100,000) registered shares of Company common stock issued pursuant
to the Company’s 2012 Equity Compensation Plan. The option
will be issued at an exercise price equal to the closing sale price
of the Company’s common stock as shown on the OTC as of the
date the option is granted. Such option will be granted no later
than three days after the date this Agreement is executed by
Employee. The option will be subject to the terms and conditions of
the option agreement, a copy of which is attached hereto as Exhibit
“A”, and the Company’s 2012 Equity Compensation
Plan, which will include, among other things, a vesting schedule.
Vesting shall be as follows: fifty percent (50%) of the options
shall vest on January 1, 2018 and the remaining options shall vest
on January 1, 2019. The option agreement shall contain a cashless
exercise provision and piggyback registrations rights. In the event
of Employee’s death, options shall vest in full and be
exercisable by Employee’s estate. Section 11.1(b)(v) of the
2012 Equity Incentive Award Plan will not be applicable with
respect to the option grant described herein.






 


 




 

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C.            

Employee shall be a
full participant in any Employee Bonus Plan and any Equity
Compensation Plan instituted by the Company (“the
Plans”). Such Plans shall allow Employee to earn: (i) a
variable cash bonus based on individual and Company Group
performance and achieving specific Company Group milestones, and
(ii) additional restricted shares/units of the Company Common Stock
based on individual performance and achieving specific Company
Group milestones. Equity grants vest over a three (3) year period,
with one-third of the grant vesting immediately, one-third vesting
on the first anniversary of the equity grant, and one-third vesting
on the second anniversary of the equity grant. Details of the Plans
are set forth on Exhibit
“B” attached hereto. Any such bonus shall be
paid in accordance with Company policy but in no event later than
March 15 in the year following the year to which the bonus was
earned.






 



D.            

Employee shall be
entitled to reimbursement for up to $10,000 (to be substantiated by
receipts) to cover expenses related to his pre-employment and
relocating to Illinois.






 



4.            

Benefits.






 




A.


Holidays and
Personal Time. Employee shall be entitled to paid holidays and
personal time off in accordance with the Company’s holiday
and personal time off policies but not less than twenty (20) days
of personal time off each calendar year during the Employment Term
(as prorated for partial years), with the time and duration of any
specific personal time off mutually and reasonably agreed to by the
parties hereto.






 




B.


Medical, Dental and
Group Life Insurance and other Employee Benefit Arrangements.
Company agrees to include Employee (and if desired Employee’s
family) in the group medical, dental and hospital plan of the
Company Group and provide group life insurance for Employee. In
addition, Employee shall be eligible for all other employee benefit
plans, including retirement plans, maintained by the Company Group
and all other fringe benefit and perquisites provided to similarly
situated employees of the Company Group. These practices and
procedures are subject to change upon mutual agreement. Employee
will be subject to all applicable fees and rules of such
plans.






 




C.


Expense
Reimbursement. Employee shall be entitled to reimbursement for all
reasonable expenses, including travel, temporary housing, and
entertainment, incurred by Employee in the performance of
Employee’s duties. Employee will maintain records and written
receipts and shall follow all Company policies and procedures for
reimbursement of expenses.






 



5.            

Term,
Termination and Severance.






 




A.


Employment
Term of Agreement. The “Employment Term” of this
Agreement shall commence on January 6, 2017 and shall continue in
effect for a period of thirty six (36) months or until terminated
by one of the parties pursuant to the terms of this Section 5.
Following such thirty-six (36) month period (and each twelve (12)
month period thereafter), the Employment Term shall automatically
renew for successive twelve (12) month periods unless either party
hereto notifies the other party at least sixty days in advance the
applicable period of its intent to not renew the
Agreement.






 




B.

Termination
and Severance:






 



(I) 

Definitions:






 


(i)
Cause. For purposes of this Agreement, “Cause” shall
mean (a) Employee’s continued violations of Employee’s
material obligations hereunder which are demonstrably willful or
deliberate on Employee’s part and which are materially
injurious to the Company Group, but only after there has been
delivered to Employee a written demand for performance from the
Company which describes the basis for the Company’s belief
that Employee has not substantially performed his/her duties, (b)
Employee’s engagement in willful misconduct related to his
position with the Company which is materially injurious to the
Company Group, (c) Employee’s conviction of a felony, an act
of fraud against or the misappropriation of property belonging to
the Company Group, (d) Employee’s breaching in any material
respect, the terms of any confidentiality or proprietary
information agreement between Employee and the Company, or (e)
Employee’s commission of a material violation of the
Company’s standards of employee conduct.


 



 

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(ii)
Involuntary Termination Other than for Cause. “Involuntary
Termination Other than for Cause” shall mean (x)
Employee’s resignation of employment following or in
connection with any of the following: (a) without the
Employee’s express written consent, a reduction in
Employee’s job title or reporting relationships, (b) without
the Employee’s express written consent, a substantial
reduction in Employee’s duties, authority and
responsibilities, as determined immediately prior to such reduction
or removal of the Employee from such position and responsibilities,
unless the Employee is provided with a position of greater
organization level, title, reporting relationship, duties,
authority, compensation and status; (c) without the
Employee’s express written consent, a reduction in the
Employee’s base salary, bonus or equity compensation, or
benefits, of greater than three percent (3%) compared to
Employee’s base salary, bonus or equity compensation, or
benefits, in effect immediately prior to such reduction; (d)
without the Employee’s express written consent, the material
relocation of the Employee’s primary office to a location
more than 35 miles away from Romeoville, Illinois, or (e) the
Company’s non-renewal of this Agreement in accordance with
Section 5.A., or (f)any termination of the Employee’s
employment by the Company without Cause or any purported
termination for which the grounds relied upon by the Company do not
in fact constitute Cause or otherwise are not valid.


 



(II) 

If Employee’s
employment with the Company terminates as a result of an
Involuntary Termination Other than for Cause, in addition to
Accrued Obligations as defined below, the Employee shall be
entitled to receive the following severance and other
benefits.






 


(i)
Restricted Stock, Warrants and Option Vesting. All Restricted
Stock, Warrants and Options and other equity or equity-based
compensation shall become one hundred percent (100%) vested and
fully exercisable and the Company Group shall have no repurchase
right. All Restricted Stock, Warrants and Options and other equity
or equity-based compensation shall, to the extent applicable,
contain a cashless exercise provision for Employee’s
acquisition of the Stock, Warrants and/or Options, and piggyback
registrations rights.


 


(ii)
Severance Payment. Employee shall receive an amount equal to (i)
twelve (12) months of Employee’s base salary (at the
Employee’s highest base salary during the Employment Term )
plus (ii) if Employee has not received payment of his annual bonus
with respect to any performance period that ended prior to such
termination of employment, the annual bonus for such performance
period. The portion of the Severance Payment described in clause
(i) shall be payable over 26 equal bi-weekly installments over a 52
week period in accordance with the Company’s regular pay-roll
schedule, and the portion of the Severance Payment described in
clause (ii) shall be payable at the time such bonus would have been
paid absent such termination of employment.


 


(iii)
COBRA Benefits. “COBRA” as used herein shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
Employee shall receive a lump sum payment in an amount equal to the
cost of COBRA continuation for a period of twelve (12) months.
Subject to Section 10, such payment shall be made within fifteen
(15) days following Employee’s termination of
employment.


 


 




 

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Accrued
Obligations means (i) any base salary earned but not paid through
the date of termination; (ii) any compensation deferred by Employee
prior to his termination of employment and not paid by the Company
(all of which will be paid in accordance with the terms of and at
the time provided in the underlying deferral arrangement); (iii)
any amounts or benefits owing to Employee under the then applicable
benefit plans of the Company; (iv) any bonus compensation earned,
but not yet paid; and (v) any amounts owing to Employee for
reimbursement of expenses properly incurred by Employee prior to
the date of termination and which are reimbursable in accordance
with Paragraph 4.C.


 



6.            

Voluntary Termination; Termination for
Cause. If Employee’s employment with the Company
terminates voluntarily by Employee (other than in connection with
an “Involuntary Termination Other than for Cause” or in
connection with a “Disability” (as defined below)) or
for Cause by the Company, then Employee is not eligible for any
benefits under this Agreement (except as to Accrued Obligations and
amounts already earned and/or stock options, warrants and/or
restricted stock already vested at that time). If Employee
voluntarily terminates his employment with the Company he shall
provide written notice to the CEO of the Company at least sixty
(60) days prior to terminating such employment unless such
termination is in connection with an Involuntary Termination Other
than for Cause or in connection with a Disability.






 



7.            

Disability; Death. If Employee's
employment terminates by reason of the Employee's death, or by
reason of Employee's Disability, then Employee’s estate or
heirs shall be entitled to receive the Accrued Obligations and Severance Payment and
other benefits set forth in paragraph 5 herein.
“Disability” shall mean a physical or mental health
condition that causes Employee to be unable to perform
Employee’s essential job functions with or without an
reasonable accommodation for more than 120 consecutive days or for
180 days in any 12-month period.






 



8.            

Proprietary Information. During the term
of this Agreement and thereafter, Employee shall not, without the
prior written consent of the Board, disclose or use for any purpose
(except in the course of his/her employment under this Agreement
and in furtherance of the business of the Company Group) any
confidential information or proprietary data of the Company Group.
As an express condition of the Employee’s employment with the
Company, the Employee agrees to execute the confidentiality
agreement attached hereto as Exhibit “C”.






 



9.            

Non-Competition. Employee acknowledges
that the nature of the Company’s business is such that if
Employee were to become employed by, or substantially involved in,
the business of a competitor the Company during the twelve (12)
months following the termination of Employee’s employment,
would cause substantial and irreparable harm to the Company. Thus,
to protect the Company’s goodwill, trade secrets and
confidential information, Employee agrees and acknowledges that
Employee will not directly or indirectly engage in (whether as an
employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor have
any ownership interest in or participation in the financing,
operation, management or control of, consulting with, any firm,
corporation or business that competes with the Company in the
electronic, GPS or alcohol monitoring of people within the
corrections or law enforcement sectors (the “Restricted
Business”), such competitors include but are not limited to,
the following entities and their respective subsidiaries: The Geo
Group, Inc., Numerex Corp., 3M Company, Corrisoft LLC, Outreach
Smartphone Monitoring, LLC, and Securus Technologies. For this
purpose, ownership of no more than one-half of one percent (.5%) of
the outstanding voting stock of a publicly traded corporation shall
not constitute a violation of this provision.






 


 




 

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10.            

Right to Advice of Counsel/Compliance with Code
Section 409A. The Employee acknowledges that he has
consulted with counsel and/or tax advisors and is fully aware of
his/her rights and obligations under this Agreement.
Notwithstanding any provision in this Agreement to the contrary:
(i) the relevant provisions of this Agreement shall be construed in
a manner so as to be exempt from or to comply with Section 409A of
the Internal Revenue Code of 1986, as amended from time to time,
and regulations and other interpretative guidance issued
thereunder, including without limitation any regulations or other
guidance that may be issued after the date of this Agreement
(“Section 409A”). To the extent required to carry out
such intent:






 


(a) The
terms used herein will be interpreted to comply with the
requirements of Section 409A, including (without limitation) that a
termination of employment must constitute a “separation from
service,” as such term is defined in Section
409A.


 


(b)
Neither the Company nor Employee shall have the right to accelerate
or defer the delivery of payments except in accordance with Section
409A.


 


(c)
Employee’s right to receive installment payments will be
treated as a right to receive a series of separate and distinct
payments.


 


(d)
With regard to any provision herein that provides for reimbursement
of costs and expenses or in-kind benefits (i) the right to
reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other
taxable year, and (iii) such payments shall be made on or before
the last day of the taxable year following the taxable year in
which the expense was incurred.


 


(e) No
payment shall be subject to offset by any other payment unless
otherwise permitted by Section 409A.


 


(f)
Notwithstanding any other payment schedule provided herein, if
Employee is identified on the date of termination as a
“specified employee” within the meaning of Section
409A(a)(2)(B), then any payment that is considered nonqualified
deferred compensation subject to Section 409A, and payable on
account of a “separation from service,” will be made on
the date that is the earlier of (A) the expiration of the six
(6)-month period beginning on the date of Employee’s
“separation from service”, and (B) Employee’s
death (the “Delay Period”) to the extent required under
Section 409A. Upon the expiration of the Delay Period, all payments
delayed pursuant to this subsection (whether they would have
otherwise been payable in a single sum or in installments in the
absence of such delay) will be paid to Employee in a lump sum, and
all remaining payments due under this Agreement will be paid or
provided in accordance with the normal payment dates specified for
them herein.


 



11.            

Assignment. This Agreement and all
rights under this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their
respective personal or legal representatives, executors,
administrators, heirs, distributes, devisees, legatees, successors
and assigns. This Agreement is personal in nature, and neither of
the parties to this Agreement shall, without consent of the other
(which consent will not be unreasonably withheld), assign or
transfer this Agreement or any right or obligation under this
Agreement to any other person or entity. If the Employee should die
while any amounts are still payable to the Employee hereunder, all
such amounts shall be paid in accordance with the terms of this
Agreement to Employee’s devisee, legatee, or other designee
or, if there be no such designee, to the Employee’s
estate.






 


 




 

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12. 


Notices. All notices, requests, demands
and other communications called for hereunder shall be in writing
and shall be deemed given (i) on the date of delivery, or if
earlier (ii) one (1) day after being sent by a well-established
commercial overnight service, or (iii) three (3) days after being
mailed by registered or certified mail, return receipt requested,
prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may
later designate in writing:





 

If to the
Employee:         
           
             
Peter K. Poli


{at
Employee’s most recent address on file with the
Company}


 

If to the
Company:                                   
Attn: CEO and HR Director


Track
Group, Inc.


1215 W.
Lakeview Court


Romeoville, IL
60446


 


Or such
other addresses or to the attention of such other person as the
recipient party has previously furnished to the other party in
writing in accordance with this paragraph.


 




13. 


Notice of Termination by the Company.
Any termination by the Company of Employee’s employment with
the Company shall be communicated by a notice of termination to
Employee at least thirty (30) days prior to the date of such
termination; provided, however, that the Company may, in its
discretion, direct Employee to not provide services to the Company
during such period (but, in such case, the Company shall continue
providing Employee with compensation and benefits during such
period). Such notice shall indicate the specific termination
provision or provision in this Agreement relied upon (if any),
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the indicated
provisions, and shall specify the termination date, and shall
specify the amounts and type of compensation and benefits to be
provided to Employee as a result of the termination.






 




14. 


Waiver. Failure or delay on the part of
either party hereto to enforce any right, power, or privilege
hereunder shall not be deemed to constitute a waiver thereof.
Additionally, a waiver by either party or a breach of any promise
hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent waiver by such other
party.






 




15. 


Severability. Whenever possible, each
provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but
this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.






 




16. 


Integration. This Agreement, together
with any attached exhibits, represents the entire agreement and
understanding between the parties as to the subject matter herein
and supersedes all prior or contemporaneous agreements whether
written or oral. No waiver, alteration, or modification of any
provision of this Agreement will be binding unless in writing and
signed by duly authorized representatives of the parties hereto. In
no way limiting the foregoing, the parties acknowledge and agree
that the Emerge Agreement is null and void and this Agreement
supersedes the Emerge Agreement.






 




17. 


Headings. The headings of the paragraphs
contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of any
provision of this Agreement.





 





 




 

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18. 


Applicable Law and Dispute Resolution.
This Agreement shall be governed by and construed in accordance
with the internal and substantive laws, and not the choice of law
rules, of the State of Illinois. Any controversy or claim arising
out of relating to this Agreement which cannot be settled by good
faith negotiation between the parties shall be settled by binding
arbitration administered by the American Arbitration Association
(“AAA”) under its Employment Arbitration Rules and
Procedures (such rules and procedures being incorporated herein by
reference). Such arbitration shall be submitted to a single
arbitrator appointed by the AAA. Such arbitrator must be an
attorney with a minimum of 10 years of experience in employment
matters. The prevailing party in the arbitration shall be entitled
to recover its reasonable costs, attorney fees and out of pocket
expenses relating to the arbitration. Both parties agree that the
procedures outlined in this paragraph are the exclusive methods of
dispute resolution. Unless otherwise agreed by the parties any
arbitration shall be held in the Chicago, Illinois metro
area.






 




19. 


Counterparts. This Agreement may be
executed in one or more counterparts, none of which need contain
the signature of more than one party hereto, and each of which
shall be deemed to be an original, and all of which together shall
constitute a single agreement.






 




20.


Tax Withholding. All payments made
pursuant to this Agreement will be subject to withholding of
applicable taxes so long as such withholding is reasonable and
consistent with the Company’s and tax authorities’
normal practices.





 





[Signatures
on Following Page]


 




 

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IN WITNESS WHEREOF, each of the parties
has executed this Agreement, in the case of the Company by their
duly authorized officers, as of the day and year first above
written.


 


Track Group,
Inc.                                                                                      
Employee


 


 


 


By: /s/ Guy
Dubois                                                                                         /s/
Peter Poli

Guy
Dubois                                                                                     
           
    Peter K. Poli

Chief Executive
Officer and Chairman


 


 

Date: December 11,
2016                                                                               
Date: December 11, 2016


 


 




 

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EXHIBIT “A”



OPTION AGREEMENT


 


 


 




 

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EXHIBIT “B”



Employee Bonus Formula


 


 


 




 

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EXHIBIT “C”



Confidentiality Agreement


 


 


 




 

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